Lions Of Retail: 8 Surprising Brands Coming On Strong In 2018

Retail
I cover the intersection of retail, loyalty and customer experience

Macy’s has proven it can get back on its feet even after a hard hit: In February it posted its first sales gain in three years. (Photographer: Victor J. Blue/Bloomberg)

It’s April, and the lambs of retail are baring their teeth.

Shoppers may be dazzled by the recent innovations marking the retail calendar, from Amazon’s same-day delivery to Walmart’s potential drones, but behind the scenes, a group of less flashy merchants has been gathering strength.

Some are niche startups while others have been around quite some time. All are using shopper analytics, brand experience and pure practicality to gain a foothold along a retail outlook that shifts like the wind.

Following, across a variety of sectors, are eight lions of retail.

1. Department store: Macy’s

Like a prizefighter, Macy’s has proven it can get back on its feet even after a hard hit. In February it posted its first sales gain in three years, triggering an almost immediate about-face in expectations.

The enthusiasm is largely driven by Macy’s turnaround strategy, called North Star. An essential part of the five-point plan, which includes emphasizing exclusive brands and digital experiences, is using its shopper data to make smarter investment decisions. In keeping with this last part, Macy’s in October 2017 revamped its Star Rewards program with the goal of attracting new customers and increasing spending among the 10% of shoppers who generate half its sales.

2. Supermarket: Albertsons

Kroger Co. may be the nation’s supermarket leader, but Albertsons is matching its shopper outreach efforts step by step. In March, the parent of Safeway and Van’s announced plans to form a digital marketplace for startups and small brands, recognizing many of its shoppers prefer them. The data collected through the marketplace will enable Albertsons to better understand and communicate with shoppers across regions.

This regional membership club is not dithering over how to compete with Amazon and its fast delivery options. In March, BJ’s expanded its partnership with Instacart to offer same-day delivery nationwide by the end of April. It’s one of a series of technology adoptions by the chain, including a mobile app with a digital couponing feature and pickup-and-pay for two-hour online fulfillment. In February, BJ’s hired its first vice president of digital commerce and experience — a month after Walmart abruptly closed 63 Sam’s Club locations.

4. Specialty: Five Below

This teen- and tween-focused retailer combines the dollar-store model with fast fashion. All items in the store, from phone chargers and comic books to decorative floor pillows and sundresses, are priced $1 to $5.

While other specialty chains are struggling against online competition, Five Below benefits because most members of its young target market do not yet have credit cards, so they prefer going to physical stores. Five Below’s 2017 performance proves this point: In the fourth quarter, it posted a 30% sales gain as its store base for the year expanded by 20%.

5. Online: Boxed

Founded in 2013 as the solution for easy bulk ordering, this online merchant became more of a household name after attracting a takeover bid by Kroger, which it rejected in January. Described as a “Costco for millennials” who might not have the time or means to get to the store, Boxed sells household items, from Cheerios to paper towels, in large quantities at low warehouse prices. And it does so without membership fees. Two-day shipping also is free (on orders of $49 or more). As a bonus, it gives customers 1% in cash rewards on all purchases.

6. Third-party delivery: Deliv

Borrowing from the Uber model, this delivery network takes advantage of GPS-enabled smartphones to mobilize its group of drivers, creating a crowd-based delivery network. Now in 35 markets, Deliv is considered one of the most successful same-day, last-mile delivery services, with a roster of retail clients that includes Macy’s, Walmart, Best Buy, Giant Eagle and PetSmart. This list reflects the diversity of Deliv’s capabilities, upon which it is building: In February, it introduced Deliv Rx, for same-day delivery to and from pharmacies, hospitals, medical device companies, veterinarians and others.

7. Value: Aldi

When it comes to protecting its turf, this low-frills German food chain doesn’t scrimp. (AP Photo/Elise Amendola)

When it comes to protecting its turf, this low-frills German food chain doesn’t scrimp. As its rival Lidl laid plans to enter the U.S. in 2017, Aldi wasted no time going on the defensive. It added organics and natural foods and is remodeling stores and building new ones — while keeping prices low.

Meanwhile, it is stretching outside of its traditional skin and testing grocery sales at a limited number of Kohl’s stores. Importantly, Aldi made these changes with U.S. rivals like Whole Foods in mind.

Lidl, meanwhile, appears to have focused on Aldi and struggled in its U.S. entry. The CEO told a German magazine that his company would pull back on expansion plans.

8. Retail services: Happy Returns

Like Boxed, Happy Returns was created expressly to eliminate a key pain point in the retail experience: the return process. Happy Returns operates as a network of “return bars,” where online shoppers can bring back purchases from participating brands including Everlane, Tradesy, Mizzen and Main and Trew. The service, available in roughly 75 locations at partnering malls and stores around the country, is free and does not require receipts, saving shoppers a little more time. For partner merchants, the service translates to foot traffic and potential sales they otherwise would have missed.

For shoppers, these eight lions of retail represent the industry’s dedication, and ability, to manage change. Let’s hope many other retailers will roar through 2018 as well.

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I'm the President and CEO of LoyaltyOne, where I have been leveraging knowledge gleaned from 120 million customer relationships over 25 years to create relevant communications and enhanced shopper experiences. I've published two books: "The Loyalty Leap: Turning Customer In...